Author: Jeff Brown (page 12 of 15)

by Jeff Brown

Real Estate Investments Broker

Author website

Some developers apparently didn’t get the memo

The end of a nearly decade long march to the stratosphere of real estate prices has brought out the media predictions of all that is dire and painful. Though I said it another way in today’s post on my own blog, here’s what I think of this particular market correction. Compared to the early-mid ’90’s S & L crisis meltdown, this market is like the sudden realization that you’ve left the house wearing two different colored socks. Apparently there are some developers in Boise (Eagle to be exact.) who haven’t got the word. Yesterday, In a post written by Phil Hoover, he talks about an article in the local paper about the plans for — you can’t make this stuff up — 20,000 new homes in Eagle, Idaho. That would literally double Eagle’s current population. Don’t those builders know these projects are doomed to failure? Have they not heard of the doom that is real estate as we know it? Don’t they read the papers?

Buyers with stealthy agendas

Even though it was last week, I fear too many readers missed Kris Berg’s post “You hate me, don’t you?”. It’s the perfect illustration of the old saying, “You can’t make this #%$& up!” There is a new level of chutzpah on display in her story, that makes you wonder what new form of dope is being hawked these days. Kris makes Mother Theresa look like a hack. 🙂

Thinking of one special word

Going into the weekend the guys at Duct Tape Marketing published a very interesting piece wondering what ONE word describes what you do well. I still haven’t come up with just one word. Is that even possible? It must be because they did it for their own company. It opened my eyes as to how people reduce what we do best to a single thought. That could be incredibly cool, or a disaster.

A meeting in Paradise

Seems there’s a meeting in Del Mar, California the first Monday of June. Brian Brady is running the show, and has invited some local celebrities. He’s calling it Read more

by Jeff Brown

Real Estate Investments Broker

Author website

In the real estate investment side of the biz, everyone wants to talk endlessly about where to invest, how to invest, the best way to analyze the various investment factors, what needs analysis, and the rest. However, the most common factor left out of the process is the human factor.

How is the human factor described in the real estate investment process? Comfort zone.

There are any number of issues that can cause investor anxiety.

• Not fully understanding the loan itself or the loan process
• The size or lack thereof of the down payment — sometimes size matters
• Acquiring property out of town, even out of state — “I can’t drive by!”
• Tax deferred exchange worries — “What if something goes wrong?”
• The timing of the acquisition — “Isn’t this a bad time?”
• Just making investment decisions about when, where, why, and how

Most of the time comfort zone issues can be either minimized or eliminated by filling in areas of ignorance. I remember a client who was very afraid of investing out of state because if a tenant moved out she’d have to fly there. Obviously we hadn’t talked too much about out of state investing at this point. She was pretty anxious about it though, and was dead set against even considering such a thing. Once we explained the management team we had in the cities under discussion she relaxed a little. When we immediately called one of the management company owners (on speaker) and discussed the process her whole countenance changed. She now owns several properties in another state.

There’s nothing more soothing to a comfort zone violation than a knowledge injection.

Of course, the problem our San Diego clients face is there’s no real upside to investing locally. It’s not that in the next 5-10 years our local income properties won’t experience appreciation, because they will — it’s a given. But when was the last time you heard an investor talk about the great investment opportunities he uncovered in San Francisco residential income property? San Diego isn’t quite at that level yet, but they might as well be. When there are half a dozen areas within a couple Read more

by Jeff Brown

Real Estate Investments Broker

Author website

Recently I posted on the subject of how to most effectively answer a client’s or prospect’s questions. Then, as the universe sometimes does, I was asked a question by a brand new client that is pretty common. On its surface the question might seem facetious, but trust me, its been asked so many times in my office, I know that’s not the case. It usually goes something like this:

We’ve now banked the $100K from the refinance on our home. But Jeff, we were thinking. How much could it hurt to take just $20K out in order to get (fill in the blank) a new boat, truck, home landscaping?

These days, since I’ve heard variations of that question so many times, I begin by answering with a question, hoping to inject a little humor. I might ask — Will you be able to sell that (fill in the blank) for a million bucks 15-20 years from now?

When I pause to enjoy the RCA Dog look on their faces, I then begin to give them a very complete and substantive answer in rich detail. Though I posted it on my blog today, I’ll give you the short answer here.

In 15-20 years that $20K will likely be directly responsible for an extra $80,000 a year or so in retirement income. If you retire at 60 and live another 20 years, that’s $1,600,000 of retirement income — over and above what the rest of your initial investment capital produced over that same period.

Less than half of my clients will ever earn $80K a year on their job. And now they can have that much extra every year in retirement.

Unless of course, 20 years earlier they decided their new boat was worth $1.6Mil in extra retirement income.

Final note — I sent the link to my blog’s post to the client who most recently asked that question. His response? One word — Awesome!

And that’s how you answer questions.

by Jeff Brown

Real Estate Investments Broker

Author website

Now I’m not talking about the student or the guy with four kids, a mortgage and $98 in savings. I’m talking about the majority of people. It’s a phenomena that translates into real estate investment on a huge scale. But first, let’s look at what I call the 4&162; savings logic.

15 gallons results in a savings of 60&162;. If the average person fills up their tank every 10 days or so, that’s a whole buck-eighty a month as Grandpa used to say. In a year that’s a savings of less than $22. And that’s why they would waste time looking for that 4&162; savings?

Think about how people do this in so many areas of their lives. They’re like the blind man who only touches the elephant’s trunk and concludes it’s snake-like. Situational awareness combined with rational thinking and the long view, will almost always produce better results than behaving as if you’re blind.

Yet that’s how a surprising number of people consistently make their decisions when finances are involved. It never ceases to amaze me. Real estate investors often think this way, costing themselves hundreds of thousands of dollars — sometimes millions.

Here’s an example.

Cher and John are clients of mine, and are very successful investors. They were very quick learners. As a matter of fact Cher is sought by investors all over for her new found expertise in property management principles.

About three years ago I told them it was time to not only exchange out of four of their San Diego properties, but that they should take their net proceeds to the Phoenix area. They were fine with that. I also gave them the same speech I gave them before we embarked on their last exchange.

Don’t focus on how much you get for your properties as long as it’s in the reasonable range of value. Whether in fact you could have held out for another $10K on that triplex is a good conversation to have at Starbucks with your $5 cup of Venti Whatever and a cookie. Otherwise, as I tell my clients, “You won’t be able to find that 10 grand Read more